Energy Market Review, Monday 26th March

Posted on 26th March 2018

Headlines for Monday, 26th March

Last week saw EU ETS carbon prices soar to their highest level since September 2011 after Energy and Clean Growth Minister, Claire Perry, said the UK wishes to stay in the EU ETS scheme until at least 2020.

Prices gained 6.4% to average €11.9/t, and on 22 March, prices hit €12.8/t.

Higher carbon prices fed into the power market, with seasonal power contracts out to summer 2020 climbing 1.5% on average. Winter 18 baseload power jumped 2.0% to£51.9/MWh.

On Thursday, the contract rose to its highest price since December 2014 at £52.2/MWh.

In contrast, day-ahead gas and power contracts moved downwards. Week-on-week day-ahead gas dropped 20.0% to 53.6p/th, amid forecasts that temperatures will increase to levels around the seasonal norm.

Storage withdrawals were particularly strong at the start of the week, as falling temperatures led to higher than seasonal normal gas demand.

Day-ahead power dropped 18.4% to £51.8/MWh, down from £63.5/MWh the previous week. The contract was pushed lower by a significant drop in its day-ahead gas counterpart.

Brent crude oil prices climbed 4.3% to average $67.8/bl and rose to a six-week high of $69.3/bl on 22 March. API 2 coal prices slipped 2.0% to average $74.6/t.

Brent Crude Oil

Brent crude oil prices climbed 4.3% to average $67.8/bl, rising to a six-week high of $69.3/bl on 22 March. US EIA data showing that US crude inventories fell by 2.6mn barrels in the week ending 16 March, as well as news that OPEC and non-OPEC members achieved 138% compliance with agreed output cuts in February, helped push prices higher. Prices are currently 32.9% above the same period last year ($51.0/bl).

API 2 Coal

API 2 coal prices slipped 2.0% to average $74.6/t. Coal prices weakened amid decreased demand from the Asian/Pacific market and a weakening Euro against the dollar.

EU ETS Carbon

EU ETS carbon prices gained 6.4% to average €11.9/t last week. On 22 March, prices reached €12.8/t, their highest level since September 2011. Carbon prices jumped after Minister of State for Energy and Clean Growth, Claire Perry, said the UK wishes to stay in the EU ETS scheme until at least 2020. Prices received further support from strong auction results and increased emissions from coal-fired power stations in Q118.

NBP Gas

Near-term

Near-term gas contracts experienced mixed movements last week. Week-on-week day-ahead gas dropped 20.0% to 53.6p/th, amid forecasts that temperatures will increase to levels around the seasonal norm. The price declines also reflect a pick-up in LNG deliveries scheduled for Britain this month. The month-ahead (April) contract declined 2.1% to 49.2p/th last week. The contract is now 0.9% higher than its level last month (48.7p/th).

Annual April 18

Annual April 18 gas rose 0.8% to 49.1p/th. The contract is now 3.4% above its price the same time last month (47.5p/th). It is also 15.3% higher than the same time last year (42.6p/th).

Baseload Power

Near-term

Near-term baseload power contracts were mixed last week. Day-ahead power dropped 18.4% to £51.8/MWh, down from £63.5/MWh the previous week. The contract was pushed lower by a significant drop in the day-ahead gas price and forecasts of higher wind generation week-on-week. The month-ahead (April) contract lowered 0.3% to £49.0/MWh. The contract is now 2.5% above its level a month ago (£40.4/MWh).

Seasonal

Most seasonal baseload power prices increased last week, climbing 1.5% on average. Summer 18 power gained 1.9% to £46.3/MWh and the winter 18 contract jumped 2.0% to £51.9/MWh. On Thursday, winter 18 power rose to its highest price since December 2014 at £52.2/MWh.

Annual April 18

The annual April 18 power contract rose 1.9% to £49.1/MWh. In comparison with the same period last month (£46.9/MWh), prices were 4.7% higher. Additionally, the value was 20.6% higher than the same time last year (£40.7/MWh).